Data centers have been around for decades, but now the U.S. has 2,700 operating data centers in the lower 48 state; a single data center can consume enough electricity to power a medium-sized city. With the rush to develop artificial intelligence (AI) and the construction of ever more centers, the power grid is already stretched to the limits, yet demand from these centers is expected to double by 2030. While electrical demand is soaring, older power generating plants are taken offline, leaving the much less reliable, renewable sources to fill the gap. Especially during extreme weather events, utilities are forced to buy power from distant sources at “capacity market auction” sites of regional transmission companies. In the Mid-Atlantic states, these auction prices can be nearly ten times greater than the utility’s selling price, according to the regional grid operator PJM Interconnections. Some are estimating that this will all result in a 20% increase in electric bills for residential and small business customers in Maryland, Ohio, Pennsylvania, New Jersey and West Virginia. Residents in the Baltimore area are paying an average of $192 more annually for electricity compared to a year ago, and now their bills could increase an additional $40 or $50 per month.
Virginia has the highest concentration of data centers in the country, and the local utility, Dominion Electric, expects bills to increase at a rate three times greater than those of the last 16 years. Despite all this increased cost to consumers, not a single penny is going to increase generating capacity. In Virginia, the State Corporation Commission has issued a warning that the rapid development of data centers has created risks and other challenges that the state has never experienced before, and that rate payers need protection from the consequences.
In South Carolina, the Public Service Commission is being pressured to authorize a new gas-fired power plant, and new transmission lines, with 70% of the power going to a new Google data center, reported Frank Knapp Jr., the president, CEO and co-founder of the South Carolina Small Business Chamber of Commerce. However, instead of Google paying for the needed power plant and power lines, Google will get a 60% discount on power, and pay drastically reduced property taxes, and no taxes on vehicles and equipment. One small business in South Carolina estimates its electric bill will increase by $1,000 per month to subsidize Google, one of the most profitable businesses in the world.
Central Ohio’s local utility, American Electric Power (AEP) is in a fight with Google, Amazon, Microsoft, and Meta in Public Utilities Commission hearings. These Big Tech companies have submitted requests to build 50 new data centers (which represents the power demand of 20 million new households) and expect AEP to spend billions of dollars on upgrades to the power grid to accommodate these facilities. However, before the utility spends these billions, it wants to protect itself with guarantees that the tech companies won’t move out the next day, build their own independent power source, or that the AI bubble might burst. Theirs is considered one of the test cases, and the tech companies plan an aggressive fight to force billions in concessions from this local Ohio utility.
